Martin is a limited partner in a card shop. At the end of the partnership's tax year, Martin's basis in the partnership interest is $25,000 ($5,000 cash investment plus a $20,000 share of nonqualified nonrecourse financing). Martin's distributive share of partnership losses for the tax year is $33,000. Martin has $30,000 of passive income this year from other activities. How much of the $33,000 partnership loss can be used by Martin in the year of the loss?
A)$5,000
B)$25,000
C)$30,000
D)$33,000

Question

Quizplus · Accepted Answer

Martin's basis in the partnership interest is $25,000. His distributive share of partnership losses for the tax year is $33,000. However, Martin has $30,000 of passive income this year from other activities. Therefore, Martin can only use $5,000 of the $33,000 partnership loss in the year of the loss.

Martin Is a Limited Partner in a Card Shop